Suspense account is a dummy or temporary account.
It is opened by an accountant to transfer the difference in trial balance.
It is opened when he is in hurry to check all the accounts.
Suspense account is called as a dummy account because it does not open any account.
It is prepared for convenience.
It is prepared to tally the trial balance.
This account is also used to treat some uncertain and incomplete transactions till their certainty.
Suspense account may have opening debit or credit balance.
Suspense account is opened with the difference in trial balance amount.
According to journal entry, one-sided errors amount is debited or credited.
When such errors are corrected, suspense account is closed.
There should not be any balance in the suspense account.
If suspense account cannot be closed, the balance amount is taken to the balance sheet.
Debit suspense balance is shown in assets side and credit suspense balance in liability side.
Keep in Mind (KIM)
Suspense account is written or prepared when errors are located after preparing trial balance. Suspense account is maintained for one sided error. If there is cash in rectified entry, we should write down suspense account in place of cash. |
PROBLEM: 13A
Following information is given to you after preparing trial balance:
Cash received from Manoj $/₹/Rs 45,000 was debited to his account.
Required: Rectified journal entry
[Answer: Suspense debited by 90,000]
SOLUTION:
Given and working note:
Step 1, |
÷ |
Step 2, |
||||||
Correct entry |
|
|
||||||
Cash To Manoj |
Dr
|
45,000 |
45,000 |
|
Manoj To Cash |
Dr
|
45,000 |
45,000 |
Again, correct entry just copy and paste but wrong debit entry credited and wrong credit entry debited
Step 3, |
|
Step 4, |
||||||
Correct entry |
x |
Wrong entry |
||||||
Cash To Manoj |
Dr
|
45,000 |
45,000 |
|
Cash To Manoj |
Dr
|
45,000 |
45,000 |
Step 5,
Rectified Journal Entry
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
To Manoj’s account (Being- cash received from Manoj wrongly debited to his account, now rectified) |
Dr
|
|
90,000 |
90,000 |
Keep in mind
In two sided error after preparing trial balance, if there is cash either in debit side or in credit at final journal entry, we must write suspense account in place of cash. |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Problem: 13B
The following errors were identified after preparing the trial balance.
(a) Suspense account has credit balance Rs 570.
(b) Purchase account (cash purchase) was under cast by Rs 250.
(c) Rs 500 received from Kapil was debited to his account
(d) Goods sold to Gopal Rs 750 in cash correctly entered in the sale book but has been debited to his account as Rs 570.
Required: (1) Journal entries to rectify the errors; (2) Suspense account
[Answer: Total suspense = 1,000]
SOLUTION:
Rectified Journal Entries
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
a. |
Purchase account To Suspense account (Being- purchase book was under casted is transferred to suspense account) |
Dr
|
|
250 |
250 |
b. |
Suspense account To Kapil’s account (Being- cash received from Kapil was debited to his account, now rectified) |
Dr
|
|
1,000 |
1,000 |
c. |
Gopal’s account To Suspense account (Being- goods sold to Gopal was under recorded by (750 – 570) = Rs 180, now rectified) |
Dr
|
|
180 |
180 |
Suspense Account
Particulars |
Amount |
Particulars |
Amount |
To Kapil’s account |
1,000
|
By Opening balance By Purchase account By Gopal’s account |
570 250 180 |
1,000 |
1,000 |
###########
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###########
Given and working note:
Purchase book was under cast by Rs 250.
Step 1, |
|
Step 2, |
||||||
Correct entry |
÷ |
Wrong entry |
||||||
Purchase To Cash |
Dr
|
500 |
500 |
|
Purchase To Cash |
Dr
|
250 |
250 |
Again, correct entry just copy and paste but wrong debit entry credited and wrong credit entry debited
Step 3, |
|
Step 4, |
||||||
Correct entry |
x |
Wrong entry |
||||||
Purchase To Cash |
Dr
|
500 |
500 |
|
Cash To Purchase |
Dr
|
250 |
250 |
Rs 500 received from Kapil was debited to his account.
Step 1, |
|
Step 2, |
||||||
Correct entry |
÷ |
Wrong entry |
||||||
Cash To Kapil |
Dr
|
500 |
500 |
|
Kapil To Cash |
Dr
|
500 |
500 |
Again, correct entry just copy and paste but wrong debit entry credited and wrong credit entry debited
Step 3, |
|
Step 4, |
||||||
Correct entry |
x |
Wrong entry |
||||||
Cash To Kapil |
Dr
|
500 |
500 |
|
Cash To Kapil |
Dr
|
500 |
500 |
Goods sold to Gopal worth Rs 750 is recorded Rs 570
Step 1, |
÷ |
Step 2, |
||||||
Correct entry |
|
|
||||||
Gopal To Sales |
Dr
|
750 |
750 |
|
Gopal To Sales |
Dr
|
570 |
570 |
Again, correct entry just copy and paste but wrong debit entry credited and wrong credit entry debited
Step 3, |
|
Step 4, |
||||||
Correct entry |
x |
Wrong entry |
||||||
Gopal To Sales |
Dr
|
750 |
750 |
|
Sales To Gopal |
Dr
|
570 |
570 |
***********
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